Bloodbath Overnight; Shanghai Down 4.27%

Europe and Asia stock markets experienced heavy losses overnight.

Asian market indexes closed with the following declines:

Nikkei           9570.67  -123.27 (-1.27%)
TOPIX            852.19     -8.61 (-1.00%)
Hang Seng  20248.90   -477.78 (-2.31%)
Shanghai        2427.05  -108.23 (-4.27%)

At 5:53 am ET stocks indexes in Europe were down as follows.

STOXX 50     2597.86     -70.81 (-2.65%)
FTSE 100       4970.40   -101.28 (-2.00%)
DAX              6022.26    -134.96 (-2.19%)

What's most interesting about these declines is that there does not appear to be any specific news event that triggered the sell-off.

The biggest negative news came out of China where
the leading economic indicator for China was revised to up only 0.3 percent in April, less than the 1.7 percent gain reported on June 15, the Conference Board said. The previous release contained a “calculation error” for total floor space on which construction began, the Conference Board now says. This could explain some of the downward pressure, but more than anything, stocks seems to be following because of their own dead-weight. Translation: Global liquidity is at very low levels. The ECB and Fed tight money policies coupled with the slowdown in China's money printing are causing huge restructurings in the economic structure of the world. The capital sector, as evidenced through the stock market downside activity, is at the core of the restructuring---which is what you would expect to occur as explained by Austrian Business Cycle Theory.